Much is heard of a demand that corporations and the wealthy pay their "fair share" of taxes, but I have heard little of what that share should be.
With only a single restriction; that the discussion is about legal tax actions, what should that "fair share" be?
One could say that the wealthy are already carrying an unfair tax burden with our progressive taxing structure - what is fair about making someone pay more just because they can?
That is the black and white of this fairness issue. But obviously in a society there must be a social compact, and in the case of taxes to support our nation, I think it is acceptably fair that the wealthy do pay a higher rate. Specifically I think the current range of about 38% is the maximum "fair" demand.
If I may preempt those that will retort that the politicians will always spend whatever they have and ask for more, I say of course they will, so let me add a second parameter and frame the question with an unlikely presumption that our government will operate in a fiscally responsible manner.
So, what say you, what is a "fair share?"
"Fair" is that everyone pays the same. No corporate double taxation (tax profits and then tax them again when the owners receive them). I will go so far as to say that it is "fair" that no child pays anything.
Unfortunately, the country can't operate on that basis, and that leaves us with some paying more for the same service as others. I'd go with your 38% as probably the fairest we can get and still have a country. But 38% of income, income not reduced to half (or less) by deductions designed to buy votes for politicians.
You ended your comment with the real fly-in-the-ointment - deductions and loopholes. Instead of asking why are they allowed to use loop holes, we should be asking why are the loop holes are there.
And the answer is... governmental social engineering! Both parties are guilty.
Set the standard, (the tax rate), and then take care of business. Stop trying to manipulate human behavior with a carrot and stick - that is not government's job! Lead us, but don't try to control us. If we don't see it your way... too bad, so sad, it is either your loss or ours, but still, regardless of the outcome, the choice should be ours and not the governments.
An interesting side-note: I am currently reading a very critical biography of Churchill. Churchill The End of Glory by John Charmley and throughout there is ample evidence of the mentality of the British leaders through the 1904 - 1933 time period. And that mentality is that the people just don't know enough to lead themselves - they need the political aristocracy to look out for them. My first thought is OH my Gawd! the audacity! My second thought is, Damn, They were right!
Want proof that the U.S. is in the same boat? Look at Fox News and MSNBC - two sides of the same coin. Would you want either to be making our national security decisions. Talk about mob rule... geesh.
GA - My opinion, and everyone has one, a flat rate for everyone would be fair. If I remember my math correctly, 15% of a million is way more than 15% of a hundred. Those who earn more would pay more just because of the rules of mathematics.
It is grossly unfair to demand that high achievers be punished when the tax man comes knocking on their door.
If everyone paid taxes at the same fair rate we would not even be talking about this today.
Hello again Old Poolman,
I used to agree with you about a flat tax, but I nave since changed my mind. A society as large and diverse as ours needs a progressive tax, and yes, unfortunately that means some social engineering taxes. I don't like it, but it would be unrealistic to deny it.
Oh well, we still have the choice to control it. But we don't have the choice to deny it.
GA - then you don't feel that with a flat percentage rate that high income earners would pay more in tax? I just can't agree that high earners should pay a higher percentage. For clarification I would not be in an income bracket that would pay a higher percentage,
Total personal income of the US is about 13 T. Total income tax collections is about 2T. Should we continue the self defeating action of borrowing from the future, that still leaves a necessary collection of 15% of all income. Including 15% from the guy with 4 kids trying to survive on $25,000 per year; his income tax will go from a "refund" of $5,000 to $3750. A loss of $8750 for a family of 4 living on $25,000. Is that what you're proposing?
I like a flat tax, but unless you put in some big deductions/exemptions, an awful lot of people aren't going to make it. And if you do, the rate goes way up, making more deductions necessary.
Deductions are part of the problem with our current system. Lobbyists are able to buy deductions for their clients. These purchased deductions serve only a few and put a larger tax burden on those of us who do pay taxes.
A flat tax also does nothing to collect taxes from cash incomes such as drug dealers, prostitutes, and other illegal means of income.
My preference would be a National Sales Tax where taxes are paid when we purchase goods and services. The wealthy obviously spend more than the poor and would be paying more in taxes.
I doubt we will see much of a change in the tax structure for many more years. Tax Preparation companies such as H&R Block hire their own lobbyists to make sure this doesn't happen. The IRS could be cut to the bare bones putting thousands of people out of work.
I'll also bet if we started this system with a blank page for allowable deductions,it would be less than a year before the blank page would become a small book.
A sales tax is a nice idea, but the rate would have to be pretty high. At least 20-25%, I'd think, and paying sales tax on a $300,000 home would really hurt.
Deductions and the blank page:
Agree. And some of the very first would be for children, home mortgage and medical expenses. "Make someone else pay for the things I want or buy!" is the (unspoken) rallying cry for all deductions, and these are no different.
There is no way that deductions would ever be fair for everyone. Many of our citizens will never be able to buy a home so they would miss out on that one.
The parents with 12 children would get deductions the childless couples will not get.
Medical expenses should not be taxed at all for anyone.
The main benefit for a National Sales tax would be the everyone would pay something when they spent their money. I have read where only about 50% pay any taxes now, and if everyone paid taxes we may be surprised at the percentage rate that would be needed to support our huge government.
But then this is all just speculation and it will never happen anyhow so I am probably just wasting your time and my time.
Always enjoy your input on these subjects.
Hey guy, some well-known personalities are behind the national sales tax, (consumption tax, VAT tax), idea, but if you think about it, while sounding fair, it would be one of the most damaging tax schemes you could think of for poor and lower income folks.
As proposed, and to meet our nation revenue needs, a consumption tax would need to be in the 20%-30% range. No problem for the wealthy, but could you live at your current level if everything you bought costs 30% more? Bear in mind that the "No income tax" would compensate answer is wrong. The people that would be hurt the most don't normally pay any income taxes.
In most economic valuations, almost without exception, the wealthy would benefit and the lower income folks would be hurt.
Yep, a VAT tax combined with a "Fair" tax makes a good sound bite, but if doesn't hold water if the goal is to reduce the tax burden on the bottom third of our taxpayers.
GA - Correct me if I'm wrong but around 50% of our population pay no taxes at all. We can't get much lower than zero. Thanks to earned income credit some who pay no taxes at all get a sizable refund check. I never have understood how a refund to those who paid zero taxes could be called an earned income credit but I guess that sounds better than welfare.
We also have some large Corporations who manage to pay zero tax because of customized tax loopholes they were able to buy through a lobbyist. We have drug dealers and other criminals making millions who never pay taxes. They also spend large amounts of money and would be paying their tax at the time of the purchase.
I still see no reason for high achievers who work hard and work smart to be penalized by paying a higher rate than someone who chooses to stay in a minimum wage job their whole life. They are paying more in taxes because they earn more money.
I would feel much better paying a sales tax than having to pay a tax "expert" every year who keeps current on the tax law changes most of us are not aware of.
I would be in favor of most any tax system that would eliminate the complex and ever changing system we have now. The current tax code is so complicated many IRS employees don't agree on how to interpret various parts of the law.
It just doesn't need to be this complicated to bring in sufficient revenue to keep our government running.
Oh my, I really opened a can of worms didn't I?
I agree with most of your response, in a gut "its the American way" and whatever happened to personal responsibility kinda way.
I agree with the gut reaction of the strive to get ahead and prosper mentality. For me, that is the American way.
But in a clash of rhetoric, gut instincts and reality - reality wins. We must deal with what is real and now, not what we wish it was.
I completely agree with your pay no taxes but get a refund point. It ain't right.
But, (I know, I always have a but), the reality is that the 50%, (your number, it is close enough for the point), that don't pay any taxes are in that boat because of their economic position. Some may be there by choice, although I strongly doubt it is the majority, but regardless, it is a fact that a regressive tax scheme like the flat tax, or even the "Fair tax," will suffer one of two, (or possibly both), consequences; 1) it will not raise the revenue needed for our societal needs, 2) it will be more of a hardship on the honest hardworking Americans trying to build a life than it will be a "fair" tax on the wealthy.
I find the words sticking in my throat, but realistically, how can you not endorse a progressive tax scheme when considering the needs of a nation, and not just that of an individual?
The following numbers are not real, just ones to make a point, but if our nation needs 30% of your income to make ends meet, who is more damaged by a 30% flat tax, you or Bill Gates? I know it doesn't sound fair, but we are both old enough to know life isn't concerned with fair.
So we have a progressive tax system. Yes, at a gut level that is unfair as hell. Bill Gates is an achiever, he should be rewarded instead of penalized, while Joe "beer gut" Minimum Wage is a slackard. Why should Bill pay a higher tax rate than Joe? Do you think it would raise the money our nation needed if we charge Bill the same tax rate as Joe?
I will really throw a curve at you when I say I don't think corporate profits should be taxed at all. Zero corporate taxes, yep, that is my thought. But, (you knew I would have a but), when that profit is passed to the share holders, (which all corporate profits must do), I think it should be taxed as income without any loopholes, deductions, capital this or that, or tax evasion schemes. The folks that end up with the money should pay the full load.
Here is why I say zero corporate taxes - because for corporations, taxes are just part of the cost of doing business, and we both know the cost of providing a product or service is always built into the price. So who really pays corporate taxes? You and I, the consumers. You could charge corporations a 90% tax, and they would not care, (at least in their American market), because they would just inflate the cost of the product or service to cover that tax cost. (and if their American market would not bear that cost; you would see their marketing efforts shift to markets that would)
I hope you don't take this response as an attack on your remarks because I really do enjoy your participation. And I do not think your perceptions are wrong. I think you espouse what most of us old fogies lament as a loss of our true American values. I am just trying to be real. With the demands of our expanded society, the demands of our governmental responsibilities, and the rightful demands of a society striving to be better - some of our "gut instincts" need a reality check.
GA - As always you make some interesting a valid points. i guess I am hung up on all things being fair and that of course will never happen.
But like you I always have a "But". When we go back to simple math, 30% of Bill Gates income is way more than 30% of my income, so he is paying more in taxes. Because of his success why should he be penalized and forced to pay a higher percentage in taxes? That very concept could convince some individuals that it is not worth striving for more because it would put them in the next higher tax percentage bracket.
View it from not how much we are forced to pay in tax, but how much we are allowed to keep after taxes. At 30% tax I am allowed to keep only 70 cents of every dollar I earn. At 50% tax I am allowed to keep only 50 cents of every dollar I earn. So a CEO making 1 million per year in salary ends up with $500,000 take home pay. Not bad in reality, but because of his earnings half of his salary was taken away from him.
Your right, his 50% loss probably hurts him less than my 30% loss hurts me, but is it fair? I don't think so.
The goal of some is that someday we will all pay 100% tax and the government will distribute this money back to the citizens as they see fit. I can hardly wait for that day to arrive.
"If I may preempt those that will retort that the politicians will always spend whatever they have and ask for more, I say of course they will, so let me add a second parameter and frame the question with an unlikely presumption that our government will operate in a fiscally responsible manner."
Might I add that is ludicrous to believe that this bunch of criminally negligent thieves and gun for hire idiot slime bags in Congress can come up with anything that remotely looks fair. Was I being a bit harsh? Nah.
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